Gimme My Money Back

You didn’t cause this financial crisis. So if you’ve been hammered, it’s not surprising if you feel that someone took your money…There are a lot of changes taking place in our economy and our world. But change means opportunity…

If you had waved good-bye to Earth at the end of 2007 and returned at the beginning of 2009, you might not recognize the old place. The robust U.S. economy you left is mired in near-record unemployment. Major investment banks, run by the smartest guys in the world, have collapsed, dragging their shareholders down with them. The housing market is in ruins, banks have failed, federal agencies are drowning and money is hemorrhaging from the U.S. financial system. Trillions—not billions, trillions—have been lost.

If you had waved good-bye to Earth at the end of 2007 and returned at the beginning of 2009, you might not recognize the old place.

It’s a global crisis, and the pain’s going to last a long time…

The goal for most of us is simple. We want to become wealthier—able to buy more goods and services than we can buy now—by accumulating assets more quickly than inflation can reduce their value.

If we lived in a static world, investing might be less important. Sure we’d want more money, but since the world stayed the same and prices never rose, we wouldn’t really need more money, assuming we were comfortable with the lives we lived. (We’d still want more, though. For sure.)

But the world we actually live in is more complicated. In real life, standing still is the same as going backward. There’s a pernicious, insidious force that eats away at our money like a termite. It’s called inflation…

That’s why we need to invest. We have to at least keep pace with inflation if we don’t want out standard of living to decline. And we have to earn enough to outpace inflation if we want to improve our lives. Not just for now, but down the road. The future is unknowable, so the more you can do to be prepared for anything, the better off you’re likely to be the day “anything” comes along. Think retirement. Inflation may be relatively stable right now, but it can wake up and come at you like a hungry bear. You need solid investments to make sure you’ve got enough money to keep living comfortably when you stop working…

Let’s be clear about one thing: we’re in one of those odd times when almost nothing you could have done would have given you a positive return from the stock market in 2008. No matter how your assets were allocated, no matter how diversified you were, no matter what stocks you owned, you were fated to lose money. Maybe a few of us—and I include myself here—stayed in and took it. With a long-term plan, there’s really no other choice…[Still] I hope you’ll agree that long-term investing is the most logical and sensible way to grow your money.